My birthday is coming up in a couple of weeks, and as usual I am asking for world peace. Short of that, I could really use some Diet Coke and a good book. Your choice.
Stock prices didn’t move a lot last week, until Friday when the May jobs report was released and it was generally considered okay. Not super. Not awful. Just okay. Bullet dodged! Stocks rose more than 1% on Friday alone and are now about 2.5% below highs reached in February. The S&P 500 closed above 6,000. Which is not really substantive and yet FEELS like it is. For the record, 139,000 net new jobs were created in May, and the unemployment rate stayed steady at 4.2%.
At the same time, new weekly unemployment claims increased to 247,000 in the week ending on May 31st. Experts were expecting 235,000 applications. The increase points to a slowdown in economic activity and a potential jump in upcoming benefit filings.
In a few days, we are expecting the consumer-price index (CPI) and producer-price index (PPI) will be released. There’s only one caveat: according to the Wall Street Journal, the Labor Department says that “staffing shortages reduced its ability to conduct its massive monthly survey.” Oops. The Federal Reserve Open Market Committee meets on June 17-18 to determine the path of interest rates. What happens when the data it depends on is unreliable?
Meanwhile, the Walmart CFO said last month that the impact of tariffs would be noticeable in just a few weeks. Which means now. So, apparently I’m getting higher prices for my birthday. Hopefully with balloons. That will be fun!
The Organization for Economic Cooperation and Development (OECD) is a nonpartisan research group headquartered in Paris. In its recent pronouncements, the OECD announced that it expects U.S. GDP (gross domestic product) will decelerate to about 1.6% for 2025, down from 2.8% in 2024. It further expects US inflation (as reflected by the personal-consumption expenditures price index) to increase to 3.9% annualized by the end of this year. In April, the PCE rose just 2.1% annualized. And finally, the OECD predicts that the Fed will keep interest rates steady for the rest of the year.
But what do the French know? They’ve got croissant crumbs on their keyboards. Mmmmm, croissants.
Among billionaires who have expressed concern over the U.S. economy and especially the U.S. debt, Jamie Dimon, Chief Executive of JPMorgan Chase, is perhaps the most vocal. But last week Ray Dalio, founder of the Bridgewater Associates hedge fund, joined the party. In his new book, he writes, “The US is at a low risk of an imminent debt crisis — but high risk in the long term.” As you know, billionaires have recently cornered the market on pontificating and they are ALWAYS right.
The U.S. government debt is now more than $36,218,617,145,302. And no, I can’t imagine how much money that is. Each American now owes $106,000 if the debt is divided equally. Can I put that on my Visa? No. My limit is not that high and moving debt is not the same as paying it off. Only once was our government debt a greater percentage of our GDP, and that was during World War II when deficit spending was considered necessary and temporary.
With all of this worry, why are stock markets doing relatively well? There are three main categories of investments (stocks, bonds, and cash – not including derivatives and weirdo bets). Bonds are not looking great as prices slide and yields rise. With tariffs expected to push inflation higher, bonds look like they’ll keep slipping. Cash yields next to nothing, which is unfair, but money is flowing into stocks. So where else?
For those of you who are sitting in expensive real estate, waiting for mortgage rates to fall, you should know that home sellers (like you) now outnumber home buyers by the largest margin in 12 years. 75% of prospective buyers are waiting for home prices and interest rates to drop before buying. In many cases, the same people are both sellers and buyers.
Mount Etna, which is an active volcano on the east coat of Sicily, erupted a week ago. My birthday wish NOT to be there has already come true!
For the week ending on June 6th, the Standard & Poor’s 500 finished at 6,000.36, the Dow Jones Industrials finished at 42,762, and the Nasdaq Composite at 19,529. The yield on the ten-year Treasury Note was slightly higher at 4.510%. U.S. crude oil cost $64.77 per barrel, N.Y. gold cost $3,338.50 per ounce, and one Euro was worth $1.14.
Elizabeth E. Cook
Partner, Diastole Wealth Management
News and information presented here was gathered from sources believed, but not guaranteed, to be reliable, including (but not limited to) The Wall Street Journal, The New York Times, The Washington Post, USA Today, Barron’s, MarketWatch, Bloomberg, Yahoo Finance, CNN, Redfin, Axios, The Hustle, Morning Brew, and The Economist. If you have questions, please call us at 203.458.5220, or reply to this email to reach me, Liz Cook.
Joseph Harris-Birtill is the youngest person ever admitted to Mensa. He is two and a half years old. His parents say he could read before he turned two and is now learning piano, Morse code and the periodic table. But can he complain about U.S. deficits? Huh? Can he?